Investors Move Money from Stocks to Cash in August, BofA Survey Finds
Investors have reduced their exposure to equities and increased cash allocations in August, as global growth expectations fell to their lowest level in eight months, according to a survey published by Bank of America (BofA) on Tuesday.
The survey, which polled 189 fund managers overseeing $508 billion in assets, revealed that only 31% of respondents were overweight in stocks this month, a significant drop from 51% in July. At the same time, average cash levels rose to 4.3% of assets under management, up from 4.1% in the previous month.
BofA attributed this cautious stance to disappointing U.S. payrolls data for July and heightened market volatility following the sharp rebound of the Japanese yen. The S&P 500 has declined 3.6% so far in August, with notable drops of 2.7% on the day of the payrolls report and another 2% the following day, triggered by a steep fall in Japan’s Nikkei share index, the largest since 1987.
The yen’s resurgence has also led to the unwinding of carry trades, contributing to the broader sell-off in global equities. However, recent sessions have seen some recovery in global markets.
Despite these concerns, the survey showed that 76% of respondents still anticipate a “soft landing” for the global economy, where growth slows gradually rather than experiencing a severe downturn.
This optimism is largely based on expectations of lower interest rates, with 93% of participants predicting a decline in short-term rates over the next 12 months, the highest level of confidence in 24 years.
The survey also indicated that 60% of respondents expect the U.S. Federal Reserve to implement four or more rate cuts in the coming year.
Investor sentiment towards Japanese equities has notably soured, with allocation experiencing the largest one-month drop since April 2016. Managers moved from a net 7% overweight position in July to a net 9% underweight in August, marking the first net underweight stance since July 2023.
Source: CNBC AFRICA
